- Summary:
- Silver price is trading within a tight range after the lower-than-expected Chinese manufacturing PMI data. Treasury yields are also a key driver.
Silver price is trading within a tight range for the second session in a row. On the one hand, the declining US bond yields are offering support to the precious metal. High Treasury yields usually boost the value of the US dollar and vice versa. In return, rising US bond yields act as a bearish catalyst for precious metals due to the inverse correlation between precious metals and the greenback.
Notably, the benchmark 10-year Treasury yields have been on a decline since early April when it hit an over three-month high of 1.77. Since then, it has dropped by about 31.55%. On the first session in August, the 10-year Treasury yields are at 1.23; down from Friday’s high of 1.27.
Nonetheless, China’s reduced manufacturing activity has curbed silver price’s gains. Earlier on Monday, the Middle Kingdom’s manufacturing PMI came in at 50.3 compared to the forecasted 51.0 and previous 51.3. Notably, it is at its lowest level since April 2020. With China being a leading consumer of industrial metals, reduced activity in its manufacturing sector has lowered silver’s industrial demand.
Silver price technical outlook
Silver price is trading within a tight range of between 25.63, which is Monday’s intraday high, and along the 50-day EMA at 25.35. At the time of writing, it was down by 0.15% at 25.45. On a two-hour chart, it is trading along the 25-day EMA and slightly above the 50-day EMA.
In the near term, silver price is likely to remain within the horizontal channel. As the week unfolds, a bullish breakout will place the nest target at 26.00. However, the bulls will need to break the resistance at last week’s high of 25.80. On the flip side, a move below the current support level will have the bears eyeing the prior support levels of 25.10 and 25.00.
